Senior Minister with responsibility for Finance in the Office of the President in Guyana, Dr. Ashni Singh, said the new oil producing country is taking all the necessary steps to ensure it does not become a victim of the Dutch disease, as it prepares for massive expansion across several sectors of the economy.
According to a report from the Department of Public Information (DPI), Dr. Ashni Singh made these remarks on Wednesday during a virtual roundtable discussion on Guyana’s finance and investment with LatinFinance. LatinFinance is a source of financial markets intelligence for the Latin America and Caribbean region.
Dr. Singh said Guyana’s petroleum sector would boost its gross domestic product (GDP). However, the Government would be managing the economic inflow to ensure it addresses the country’s immediate developmental needs, as well as plans for sustainability, DPI stated in its report. The Minister said the Government is also trying to avoid a situation where revenues from the petroleum sector undermine the competitiveness of the non-oil economy.
“We want to make sure that we avoid the pitfalls that we’ve seen other countries that have gone this route before in culture, and here I mean excessive dependence on or excessive exposure to a single sector. We recognise our oil and gas will drive a dramatic expansion, but we recognise too, that we need to ensure that we put in place all of the macro structures that are necessary to avoid for example, Dutch disease,” Dr. Singh was quoted by DPI as saying.
He said the Government has placed a lot of ‘policy emphasis” on ensuring that the non-oil economy continues to be competitive and contribute to the country’s overall GDP growth.
“We’re anticipating a rapid expansion on the services side, logistics, transport and the on-construction side-construction of infrastructure, construction of office buildings. On the services side, rapid expansion in services including financial services, all of which will contribute to rapid expansion in real output,” Dr Singh said.
With a Sovereign Wealth Fund in place, the Finance Minister said the revenues there will be managed in accordance with the highest international standards.
“So, what does that mean? We’ve subscribed to all of the major international standards for managing resource revenue responsibility and sustainability. This means ensuring that we address issues like the inter-generational issues and also the Dutch disease issues because what you don’t want is a rapid inflow,” Dr. Singh said.
U.S. oil major ExxonMobil has made 18 discoveries in Guyana since 2015 amounting to approximately 9 billion barrels of oil equivalent resources. The company began producing oil at the Liza Phase 1 development in December 2019.
It is estimated that by the end of the decade Guyana oil production will surpass one million barrels per day, potentially catapulting the country to the number 2 spot for oil producers in Latin America.